Loans and Taxes
Because learning benefits everyone, the federal government offers incentives for individuals to pursue education throughout their lifetimes. One of the ways they offer incentive is through tax credits.
The Lifetime Learning Credit is one such tax break, and it goes to eligible taxpayers who are also responsible for student education expenses.
So, to whom exactly is the Lifetime Learning Credit offered? It’s a tax credit expressly designed to offer relief to taxpayers who are students themselves or who pay educational expenses for dependents. It is one of a few tax discounts or incentives offered to help Americans better afford post-secondary education.
Those who can claim the Lifetime Learning Credit must meet all three of these qualifications:
Determining eligibility, as well as determining the expenses that you may or may not be allowed to write off, can be a complicated process. More information is available at the IRS website.
It would be ideal if you could claim every single expense associated with your education, but the Lifetime Learning Tax Credit does impose a few limitations.
You may calculate 20% of up to $10,000 in educational expenses or a maximum of $2,000 in credit for yourself and/or your dependent student.
Eligible educational expenses include tuition and necessary school fees. Expenses must be related to post-secondary education.
You must have to actually owe a sufficient amount of taxes to qualify for the Lifetime Learning Credit.
If you are claiming someone other than yourself, you must claim them as a dependent on your taxes.
Income limitations apply: if you are single your Modified Adjusted Gross Income must be less than $55,000 and if you’re married and file jointly your MAGI must not exceed $110,000 to be eligible for the tax credit.
Other qualifications include:
You’ll need a 1098-T form from your college in order to apply.
Again, you are only eligible to take a credit for educational expenses incurred during the tax year. Educational expenses include tuition and fees.
If you have any more questions, ask your tax advisor for direction with the Lifetime Learning Tax Credit.